We saw a lot of confusion in the headlines as to the weakness in AUDUSD yesterday. The RBA meeting had very little to do with it, and the AUD has just been a proxy of Chinese markets. A higher USDCNH and weaker HK50 saw AUD lower, and a simple overlap will highlight this. Weaker China Caixin services PMI data was behind this, so as we look ahead at China trade data (tomorrow – no set time), international funds continue to use the AUD as a liquid and cost-effective vehicle for trading the yuan. After a big move lower on the session yesterday, we are seeing modest follow-through selling in AUDUSD today – not influenced by Aus Q2 GDP (which was modestly hotter), but USDCNH pushing higher.
Favour this pair further lower, although if China property stocks do reverse higher here, I’d reverse as a day trade and follow the tape.